Appaloosa's Tepper: Fed Is Looking for Growth, Growth and Growth Instead of Taper

Hedge fund titan David Tepper said the Federal Reserve's decision not to begin withdrawing its massive stimulus this month shows the central bank's bias is heavily toward growth, and that means stocks should benefit.

Tepper, founder and president of Appaloosa Management, told CNBC the Fed's signal was blunt and to the point with its delay on tapering of the $85 billion monthly bond-buying program that has underpinned financial markets.

"With the stabilization of Europe, the apparent pickup in China (note higher dry bulk index) and a U.S. economy still on reasonable footing, despite a slight slowdown in housing, the Fed's apparent heavy leaning to a growth policy should lead to a pretty favorable environment for the markets," Tepper added.

The surprise decision Wednesday came because a majority of the Federal Open Market Committee and Fed Chairman Ben Bernanke want to see more evidence the economy's recent improvement will be sustained.

A majority of 17 economists polled by Reuters after the Fed announcement said the central bank could now announce the start of a taper in purchases at their December 11 and 12 policy meeting.

"The decision to hold off on tapering seems to be related to the rise in [interest] rates, which they are now concerned could sap the economy's momentum. Well, rates will back up again the next time they hint at tapering, so will another rise in rates then cause them to pull back on tapering?" asked Omair Sharif, an economist at RBS in Stamford, Conn.

CBS MoneyWatch speculated there were four reasons why the Fed hesitated, all of which could aggravate a tepid economy — the budget showdown in Washington, lack of inflation coupled with weak jobs figures, fear of pushing interest rates higher and the potential that tapering could harm the recovery of emerging markets.

"Overall, there isn't a lot to be gained from the Fed continuing the bond purchases," MoneyWatch concluded. "But there is potentially a lot to lose from miscalculating the markets' reaction to the onset of tapering."